“Kim Nam-guk’s suspicions, the source of coin funds and whether or not they were paid are the core of the prosecution’s investigation.”

“It seems that the core of the prosecution’s investigation at this stage is what money Rep. Nam-guk Kim bought the coin with and whether he received it for free or at a low price. Prosecutors will be looking at the transaction details by seizing and searching the coin exchange, and through this, it is expected that it will be relatively easy to prove the allegation of violating the Political Fund Act.”

Attorney A, who had a lot of experience in special investigations during his tenure at the prosecution, pointed out the main points of the investigation of the coin (virtual asset) transaction suspicion surrounding the independent lawmaker Kim Nam-guk. Attorney A said, “If the legislative lobby that has recently raised suspicions turns out to be true, bribery is a crime. Starting with the search, there is a possibility that more charges will increase as the source of the coin, the size of the transaction, and details of deposit and withdrawal are identified.”

“Planned political repression? It is difficult to achieve realistically.”The 6th Seoul Southern District Prosecutor’s Office (Chief Prosecutor Lee Jun-dong) is in charge of the investigation into the coin suspicion against Rep. Kim. The Seoul Southern District Prosecutor’s Office has six criminal divisions, two financial investigation divisions, and a joint investigation team for financial and securities crimes. The Criminal Investigation Department mainly handles cases involving police transfers. In particular, the 6th Detective Department is in charge of the role of the Anti-Corruption Investigation Department, dedicated to investigating bribery cases of high-ranking officials and corruption of the owners of large corporations. Although it did not take the official name of the Anti-Corruption Investigation Department, in reality, it is performing the function of combining the Anti-Corruption Investigation Department, the Public Investigation Department, and the Drug Investigation Department. The fact that the prosecutor’s command entrusted the case of Congressman Kim’s coin suspicion to the 6th Detective Department, not to the Investigation Department or the Financial Investigation Department, suggests that the repercussions of this case may not be simple. The 6th Detective Division began an investigation after receiving a notification from the Financial Services Commission’s Financial Intelligence Unit ( FIU ) early last year that abnormal transactions were suspected. Recently, Seoul Metropolitan Council member Lee Jong-bae accused Kim of violating the Political Fund Act and the Capital Market Act, and taking bribes. Detective Division 6 seized and searched cryptocurrency exchanges such as Bithumb and Upbit on May 15 and 16, as well as blockchain affiliates of Kakao. It is known that the search and seizure warrants of the prosecution indicated violation of the Political Fund Act, concealment of criminal proceeds, and tax evasion. At the end of last year, the court requested a search and seizure warrant for Congressman Kim’s electronic wallet, but it was rejected twice, and the investigation began in earnest six months later.

According to coin experts and netizens’ estimates based on the disclosed transaction details, Congressman Kim’s coin investment is said to reach up to 12 billion won. Congressman Kim has at least 4 coin wallets and a total of 41 types of coins that are estimated to have been traded, 15 of which are known as P2E ( Play to Earn ) coins related to game companies.

Summarizing the situation so far, the core suspicions against Congressman Kim can be largely compressed into four branches. △ Where did the coin investment come from? ) △Has legislative lobbying been received from related industries (violation of the Conflict of Interest Prevention Act and suspicion of bribery), etc.

Crypto assets, including coins, are said to be difficult to trace and difficult to investigate. It is not easy to punish various crimes mediated by coins as the relevant laws and regulations are still insufficient, so the situation is that the existing provisions are respected to a large extent. Attention is focusing on whether the reality of various suspicions surrounding Congressman Kim, including the size of Congressman Kim’s coin transactions and profits, will be revealed in the prosecution’s investigation.

Suspected coin inflow through airdrop and private sale
1 “Where does the coin investment come from?”

Currently, the most important suspicion surrounding Congressman Kim is the source of the coin purchase funds. Initially, Rep. Kim said, “I invested in virtual assets with 1 billion won from the sale of stocks,” but the source of the coin purchase funds has not been clearly clarified, such as confirming that the deposits have rather increased in the property disclosure details. In this regard, the prosecution seems to suspect that there is a possibility that Rep. Kim, an incumbent politician, may have received free coins from others or companies. According to the Political Funds Act, political funds refer to “money, securities, and other goods provided to a person who engages in political activities and the expenses incurred in the person’s political activities.” The prosecution believed that the coin was included in ‘other things’.

Seoul Southern District Prosecutor’s Office, Yangcheon-gu, Seoul. [News 1]
No matter how much Congressman Kim traded or owned a large amount of coins, that in itself is not illegal. According to the Public Service Ethics Act, coins are not subject to property disclosure. The National Assembly Secretariat requested this year to members of the National Assembly and their aides, “Please list coins when disclosing assets,” but this is only a recommendation. However, if Congressman Kim invested in the coin with someone else’s money, not his own property, or was provided with the coin itself, it could be a violation of the Political Fund Act. If it is not a legitimate political fund received through donation or sponsorship, it can be punished regardless of whether it is related to the job or whether it is in return.

‘Airdrop’ and ‘private sale’ are suspected as the methods by which the coins flowed to Congressman Kim. Airdrop is a kind of gifting activity in which coin companies distribute coins free of charge. The Seoul Southern District Prosecutor’s Office is looking into whether there was any illegality in the process of acquiring some coins by airdrop method. Regarding the airdrop controversy, Rep. Kim refutes, “It is a service that anyone can use by depositing virtual currency and receiving some kind of interest.” Some point out that a ‘private sale’ should be paid attention to before coin listing. A private sale is to designate a specific person to sell a coin, and if the selling price is low, profit after listing can be expected.

“Even if you use undisclosed information, it is difficult to punish under the current law”
If the coin received by Rep. Kim is recognized as a price, it is possible to establish a bribery crime. Coins are a bribe if not only did the coins flow into illegal political funds, but in return, Congressman Kim gave a profit to a specific person through legislative activities.

2 “Did you hide coins to avoid tracking and taxation?”

If a crime is confirmed in the process of identifying the source of coins and coin investment, it is possible to prove another charge listed in the search warrant, violation of the Concealment of Criminal Proceeds Regulations Act and tax evasion. It happens. The charge of concealing criminal proceeds may be related to an act of intentionally hiding coins by depositing them in a wallet or trying to cheat the process of forming a property. You can buy suspicion that you have converted unfairly acquired funds into coins or re-cash the profits obtained with the coins secured in that way. If Rep. Kim blatantly attempted to evade the authorities’ pursuit by concealing criminal proceeds in the coin transaction process, he could also be punished for tax evasion. Attorney B, a former prosecutor with experience in fair trade and financial case investigations, said, “I know that tax evasion related to coin and other assets is still rare in Korea,” but “Rep. Kim dispersed and deposited coin proceeds for the purpose of avoiding tax tracking. If it is revealed that he has actively engaged in deception, he can be punished for tax evasion.”

3 “Did you trade coins with undisclosed information?”

As explained by Congressman Kim, even if the 1 billion won in stock sales is seed money for coin investment, questions remain. So far, the number of coins in the virtual asset wallet that coin experts and netizens presume to belong to Congressman Kim reaches 1.37 million just for Wemix alone. Considering the market price at the time of holding, it is estimated at about 12 billion won. If you do a simple calculation, it is probable that you will have seen a profit of more than 10 times. The reason why the suspicion grows is because of Congressman Kim’s coin investment pattern. Unlike major coins such as Bitcoin and Ethereum, ordinary people invested a large amount in the so-called ‘Jobcoin’, which is unfamiliar even to exist. The P2E coin ‘Mekong Coin’ purchased by Congressman Kim soared 3 times immediately after the purchase, and another P2E coin ‘Mabrex’ rose in price by nearly 30%. Some suspect that Congressman Kim may have used undisclosed information to buy small and medium-sized coins and aim for profit.

However, even if these suspicions turn out to be true, the legal community’s point of view is that punishment under the current law may not be easy. This is because, in order to punish the use of undisclosed important information in accordance with the Capital Market and Financial Investment Business Act (Capital Market Act), the securities properties of the coin must be proven. Even if a coin with securities properties is purchased using undisclosed important information and profits are obtained, it can only be punished for fraudulent illegal transactions. Attorney C, a former prosecutor, said, “Even if Rep. Kim uses undisclosed important information to buy various coins and make a profit, it is difficult to punish under the current Capital Market Act, which deals with securities and derivatives.” He said, “In the case of Japan, in 2019, the Financial Instruments and Exchange Act, which corresponds to Korea’s Capital Market Act, was amended to punish the use of undisclosed information on virtual assets.” added.

4 “Have you received legislative lobbying from the related industry?”

As the situation in which Congressman Kim traded several coins related to P2E was revealed, sparks are spreading to the game industry. P2E is a combination of games and blockchain technology to convert game money obtained in the game space into coins or cash. Currently, in Korea, direct cashing of game money is illegal according to the Game Industry Promotion Act (Game Industry Act), but some users are playing overseas P2E games through detour access. If game money is cashed through coins through deregulation, game companies can expect huge profits. P2EOn the other hand, those in favor of legalization are in the position that “deregulation is desperately needed for innovation in the game industry,” while the opposite side is concerned that “it can in fact turn games into gambling by encouraging speculation.”

Seoul Southern District Prosecutor’s Office Investigates Game Company Representative Fraud Suspicion
Those who raise the so-called ‘ P2E lobby suspicion’스포츠토토 suspect that Congressman Kim’s political actions and legislative activities represent the interests of the industry that wants P2E legalization. The Korea Game Society said in a statement on May 10 , “There have been rumors that P2E companies are lobbying the National Assembly for several years. ” “We need to dismantle the community of interest for those who have the wrongdoing and hold them accountable.” Jeong-Hyeon Wi, professor of business administration at Chung-Ang University, who is the president of the society, said, “If it is possible to convert game money → coin → cash, game companies that issue coins benefit greatly.” We also need to investigate,” he said. In February of last year, Rep. Kim served as the head of the online communication team of the Election Countermeasures Committee at the then Democratic Party Lee Jae-myung presidential election camp , and said, “We plan to launch a Lee Jae-myung fund using blockchain-based NFTs (non-fungible tokens ) .” This announcement worked as a favorable factor for the coin market, and the price of Wemix Coin, which is estimated to be held in large quantities by Congressman Kim, temporarily rebounded. It is also controversial that Rep. Kim co-sponsored the 2021 amendment to the Game Industry Promotion Act. At the time, the amendment was based on the establishment of a new provision that ‘game money refers to virtual currency (cryptocurrency) used in games’, and P2E

The story of the beginning of legalization followed. At the time, this amendment was not passed, but if it was passed, it would have been a significant boon for P2E coins. Rep. Kim has consistently insisted on innocence, saying, “It was a transparent and legal transaction,” right after the controversy arose. The game industry also denied allegations of lobbying the political world.

There is a possibility that this situation will spread to the game industry as a whole as the prosecution’s investigation is directed to the representative of the coin issuer. On May 11, 22 Wemix investors filed a complaint with the Seoul Southern District Prosecutor’s Office against WeMade CEO Jang Hyun-guk on charges of fraud and fraudulent trading under the Capital Markets Act. They claim that “WeMade deceived investors with false facts about Wemix circulation in the process of issuing and selling Wemix, causing great losses.” The Seoul Southern District Prosecutor’s Office assigned this case to the 6th detective division in charge of investigating the case of Congressman Kim.

Regarding the suspicion surrounding Congressman Kim’s coin investment, lawyer Kim Jong-min, who served as the representative of the Korean government of the Organization for Economic Cooperation and Development ( OECD ) Anti-Bribery Committee and the head of the Suncheon branch office, said, “If Congressman Kim traded or held coins in an unfair way and made a big profit, This is in violation of not only the law, but also Article 46, Paragraph 1 of the Constitution, which specifically stipulates the duty of integrity of lawmakers,” he said. I can give you a warning,” he said.

Leave a Reply

Your email address will not be published. Required fields are marked *